Index means the statistical composite that measures changes in the
economy or in financial markets, often expressed in percentage changes
from a base year or from the previous month. Indexes measure the ups and
downs of stock, bond, and some commodities markets, in terms of market
prices and weighting of companies in the index. An index is a
statistical measure of change in an economy or a securities market.
In the case of financial markets, an index is essentially an imaginary
portfolio of securities representing a particular market or a portion of
it. Each index has its own calculation methodology and is usually
expressed in terms of a change from a base value. The main objective of
this project is to understand the composition and performance of two
main stock indexes in India i.e., SENSEX and NIFTY. It includes: to
understand the concept of stock indices; To study the major companies
those are part of the indices; to study the volatility of stock prices
and indices and to study the impact of different economic, industry and
company specific factors that effect the stock prices and stock market
indices.
30 companies from different sectors have been selected to study the
market and to construct the SENSEX. The market share is taken as base
for the selection of index construction i.e. companies have been
selected on the basis of this market share. The process of constructing
an index is tedious but very useful for a normal investor who works on
his own in his investment game. The process of constructing market
leader index in this present project work is given clearly and any
investor can follow this process to easily construct his own index.